Congressional Democrats hold the political high ground in their battles with President Bush over the budget and children’s health — and plan to press their advantage to the hilt. [IMGCAP(1)]

House Majority Leader Steny Hoyer (D-Md.) will launch an attack on Bush’s fiscal record in a speech to the National Press Club on Friday, making the point that, after years of piling up deficits, Bush is now trying to mollify the GOP base by planning to veto defensible Democratic spending measures.

“This president has not vetoed an appropriations bill — ever,” Hoyer told me in an interview previewing his speech. “Notwithstanding the fact that Republicans increased spending at an annual rate of 7.1 percent [since 2001], as opposed to 3.9 percent under President [Bill] Clinton.

“That’s what Alan Greenspan is talking about when he says that [Republicans] talk a good game but they don’t play a good game,” Hoyer said, also repeating the former Federal Reserve chairman’s charge that Bush and Congressional Republicans “abandoned principle for power.”

With veto threats based on Democrats’ plans to spend just $23 billion more than Bush proposed for fiscal 2008 — out of a total federal budget of nearly $3 trillion — Hoyer said the president “is trying to prove at this late date that he is fiscally responsible. And, trying to convince the [Republican] base that they need to come home. And … the leaders of the House and Senate are trying to reinstate some credibility. They abandoned PAYGO. We’ve reinstated PAYGO.”

Indeed, even career officials at the White House Office of Management and Budget concede that Democrats have restored the principle of “pay-as-you-go,” offsetting new spending either with spending cuts or tax increases. Hoyer said 80 percent of his party’s new spending proposals were covered by cuts elsewhere and 20 percent with new taxes.

The $35 billion price tag on bipartisan legislation being passed this week to expand the State Children’s Health Insurance Program is covered with a 61-cent-per-pack tobacco tax, which the administration — as part of Bush’s veto threat — has branded as “regressive,” even though studies show it discourages smoking and might save lives.

In typically raw style, House Democratic Caucus Chairman Rahm Emanuel (Ill.) told me that “Bush is f—ing his party” by forcing Republicans to vote against the SCHIP bill, which extends health insurance to 5.8 million low-income children. “We’re going to throw it back at them time after time.”

The Bush administration has decided to wage an ideological battle royal over SCHIP, contending that even the pending version backed by conservatives such as GOP Sens. Orrin Hatch (Utah) and Chuck Grassley (Iowa) represents a leap toward “government-run socialized medicine.”

Proof that it is no such thing lies in the fact that the bill is backed by America’s Health Insurance Plans — the insurance lobby — the American Medical Association, the Pharmaceutical Research and Manufacturers Association and the Health Care Leadership Council, representing providers — all stout opponents of “government-run medicine.”

Hoyer charged that Bush has abandoned his own 2004 Republican National Convention promise “‘to lead an aggressive effort to enroll millions of poor children who are eligible but not signed up for government insurance programs.’”

Two years ago, Bush’s budget contained money for states to enroll eligible children, but it was dropped in later budgets. And Bush’s $5 billion proposed expansion of SCHIP would result in a loss of coverage for 1.4 million children, according to First Focus, a children’s advocacy group.

The administration hopes that, following Bush’s veto, negotiations will ensue forcing Democrats to pay attention — as they haven’t so far— to his proposal to expand health coverage by giving all taxpayers a $7,500 tax deduction to buy private insurance.

Hoyer told me he was willing to talk about that, but Democrats are more likely to force embarrassing votes on Republicans and then extend the existing SCHIP until 2009, when a Democratic president presumably would expand it.

Meantime, Hoyer is beginning the campaign to convince voters that Democrats are far more fiscally responsible than Republicans. Citing numbers substantially confirmed by the Congressional Budget Office, he said, “when they started out, we had a projected surplus of $550 billion for this year” — CBO actually projected $573 billion — “but now we’ll have a deficit of $158 billion, a three-quarter-trillion turnaround.”

“This president has had about $1.3 trillion of deficit spending,” Hoyer said, “largely tax cuts but also spending,” against Clinton’s net surplus of $62.9 billion. “Whether it was a farm bill, the prescription drug bill or appropriations bills, his stance was ‘I’ll sign them.’”

Now, Hoyer said, he wants to veto bills that increase spending by just $5 billion over last year’s levels and reverse Bush cuts of $16 billion in programs such as medical research, aid to local police, education and homeland security.

Moreover, he said, Democratic spending increases represent only around 10 percent of the $200 billion Bush is requesting to fund military operations in Iraq and Afghanistan.

All told, it’s a pretty devastating case. The SCHIP veto reveals Bush as no compassionate conservative. And his deficit buildup shows him to be no fiscal conservative, either.

Meantime, Democrats used to be the tax-and-spend party and they may be again. But, this year — and heading into 2008 — they come off as the party of fiscal responsibility while the GOP is the party of tax-and-borrow.